Author Topic: Does Value Investing Have a Marketing Problem?  (Read 1967 times)

LC

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Re: Does Value Investing Have a Marketing Problem?
« Reply #10 on: August 18, 2020, 03:58:46 PM »
Quote
Absent broader macro forces, does this not imply a marketing problem?

No, in my opinion it implies an interest rate problem.

Lower rates means near-term cash flows are simply less valuable. Yes, you may be earning 4x EBIT, 10x earnings, whatever metric you want to use. But those CFs are simply not as valued by the market. Compared to firms who have stronger long-term prospects, but all that value is locked up far in the future. Low interest rates means the carrying value to hold all that future value is much less expensive.
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RVP

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Re: Does Value Investing Have a Marketing Problem?
« Reply #11 on: August 18, 2020, 04:31:30 PM »
Agree that lower interest rates benefit cash flows further out in the future.

But long-term prospects are just that, "prospects". Isn't the notion that companies (outside more obvious cases like Amazon) are able to convince investors of their long term prospects a form a good marketing? And if a value company is not in secular decline, shouldn't they be able to do similar? Is the investment community focused primarily on said value company's near term robust cash flows (instead of future), because value investors/ management put it front and center, and is that a marketing problem?   

D33pV4lue

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Re: Does Value Investing Have a Marketing Problem?
« Reply #12 on: August 19, 2020, 07:34:42 AM »
Idk look at Ackman usually when he is out in the media touting XYZ position it usually doesn't end up to well for him. Last two years he has performed well and he hasn't been out at Sohn's giving presentations about why he is right. Personally I wouldn't want to invest in a company that is extremely promotional trying to convince people why their stock should be valued at XYZ. I'd prefer a good capital allocator vs a car salesman.  Part of why value investing works is because these stocks are overlooked. If you do good valuation work eventually the market will agree with you (to paraphrase Joel Greenblatt) sometimes that will take a few years and you may become impatient but if every stock was as widely followed as Mega Cap Tech the opportunities for value would be few and far between.

RVP

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Re: Does Value Investing Have a Marketing Problem?
« Reply #13 on: August 19, 2020, 07:20:03 PM »
I would argue that on balance, Pershing Square has benefited from being promotional (plus being large shareholders). And whether their picks were right or wrong, the market has been rather quick to agree/ disagree.

I would also argue that PS's holdings for the past two years skewed towards compounder-type businesses (that were never really "value" on an absolute basis even when taking into consideration their asset-light nature), and for the most part already had considerable marketing heft within the enterprise. And because they benefited largely from the large-cap/ compounder trend, there really was no need to go out to the media touting XYZ position.

Were the inverse true, I would wager they would not be sitting quietly.   

 

DooDiligence

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Re: Does Value Investing Have a Marketing Problem?
« Reply #14 on: August 19, 2020, 07:50:04 PM »
Idk look at Ackman usually when he is out in the media touting XYZ position it usually doesn't end up to well for him. Last two years he has performed well and he hasn't been out at Sohn's giving presentations about why he is right. Personally I wouldn't want to invest in a company that is extremely promotional trying to convince people why their stock should be valued at XYZ. I'd prefer a good capital allocator vs a car salesman.  Part of why value investing works is because these stocks are overlooked. If you do good valuation work eventually the market will agree with you (to paraphrase Joel Greenblatt) sometimes that will take a few years and you may become impatient but if every stock was as widely followed as Mega Cap Tech the opportunities for value would be few and far between.

Preach  ;)
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